Garment maker strong despite global crisis

The Jakarta Post, Jakarta | Tue, 12/09/2008 11:44 AM  

Publicly listed garment manufacturer PT Pan Brothers has pledged to continue with its construction of two new factories, as it has had no changes to orders or contracts despite the global financial slowdown. 

"We will need 4,000 workers at the new factories to achieve their full operation scheduled for next year," finance director Fitri Hartono told The Jakarta Post on Friday. 

The new factories are being built in Solo and Boyolali, Central Java. 

Pan Brothers currently employs more than 11,000 workers in its factories in Tangerang, West Java, and Solo, Central Java. 

The company makes products to order from international brands such as Calvin Klein Jeans, New York & Co, Nautica, Chaps Polo Ralph Lauren and Marks & Spencer. Its subsidiary in Tangerang, PT Pancaprima Ekabrothers, makes jackets for brands such as Nike, Adidas, Reebok and The North Face. 

All products are exported overseas, including to the United States, Europe, Canada and Australia. 

The company's expansion plan runs counter to the current trend where many industries -- including garment and textile businesses -- are experiencing cancellations of or reductions in orders as a weaker global economy trims demand. 

The Ministry of Manpower and Transmigration has said it expects 40,000 workers to be laid off in the near future. With the global financial crisis dragging the world's economies into an recession estimated to be the worst in a decade, economists and business associations have said Indonesia's economy will not be left untouched and that the inherited negative impacts could be long lasting. 

Things however are looking good for Pan Brothers. 

From 2007 to 2008, the company spent US$18 million on capital expenditure, including for the construction of its new factories. It plans to spend $32 million more to finance its expansion until 2012. 

According to Fitri, the company's orders for next year increased because its partners had moved their production suppliers from other countries to Indonesia to cut production costs. 

"So, we see this recent global crisis as a business chance for us," she said, adding the company had signed only a six-month production contract. 

In the first nine months of 2008, the company accumulated Rp 1.4 trillion ($115.95 million) in sales revenue, a 12.3 percent increase from Rp 1.24 trillion during the same period last year. Its target is Rp 1.8 trillion in sales revenue in 2008, an 11 percent increase from Rp 1.62 trillion last year. 

The company recorded Rp 18.9 billion in net profit during the January-July period, a 3.4 percent increase from Rp 18.3 billion during the same period last year. 

It has yet to record its net profit in the first nine months of the year as it is still calculating its estimated tax obligation. 

It has set a target of a 5 to 10 percent increase in sales revenue next year. (hwa)